Levels of Available Coverage

FEGLI offers four levels of coverage: Basic and three Options (A, B, and C). In order to enroll in any Option, the employee must be enrolled in Basic.

• Basic--the amount of coverage ("Basic Insurance Amount" or BIA) equals the employee's salary (rounded up to the next $1,000) plus an additional $2,000 (e.g. an employee making $97,500 would have $100,000 of coverage: $97,500 rounded up to $98,000 + $2,000 additional = $100,000), but the minimum level of coverage is $10,000
  • The Basic coverage also provides an "Extra Benefit" for employees who die before age 45; total Basic and Extra Benefit coverage is the BIA multiplied by an "age multiplication factor", which starts at 2.0 for employees 35 and younger and decreases by 0.1 for each year until age 45 when the Extra Benefit is no longer available.
• Option A--provides an additional $10,000 of coverage, regardless of salary
• Option B--provides a multiple of the employee's salary (rounded up to the next $1,000); the employee may choose a whole multiple of 1, 2, 3, 4, or 5 times salary (no fractional multiples allowed)
• Option C--provides multiples for family members (the amounts per multiple are $5,000 for a spouse and $2,500 for each dependent child); the employee may choose a whole multiple of 1, 2, 3, 4, or 5 (no fractional multiples allowed)

Accidental death and dismemberment (AD&D) insurance is included under Basic and Option A ($10,000) at no additional charge, and is paid in addition to life insurance if applicable. There is no AD&D coverage under Options B or C. For accidental death, payment is 100% of the above amounts. For accidental dismemberment (defined as loss of a hand, foot, or sight in an eye) payment is 100% if two or more of the above are lost in the same accident, 50% if only one of the above is lost. In a specific accident no more than 100% of benefits can be paid and all injuries or death resulting from the same accident within one year of the accident are considered one event; however, in a subsequent accident benefits are paid separately.

Coverage during Employment

Employees are automatically enrolled in Basic upon appointment unless they choose to disenroll, while Optional coverage must be selected within 60 days of appointment, and in both cases enrollment and coverage are guaranteed regardless of the employee's prior medical history. Otherwise, coverage can only be obtained during an open season (unlike for Federal Employees Health Benefits insurance coverage, open seasons are not annual, and are in fact quite rare; there have been only nine open seasons in the program's history and none since 2016), by providing satisfactory medical information (after one year from the date of any prior waiver, but Option C cannot be selected on this basis), or a qualifying "life event" (marriage, divorce, acquisition of a child, or death of a spouse). If an employee leaves government service with no coverage and subsequently returns, the break must be at least 180 days in order to become eligible once again barring either a rare open season, proof of satisfactory medical information, or life event.

Coverage at Retirement

In order to maintain continuous coverage at retirement, the employee must take an immediate annuity and must have maintained coverage for five years preceding (or, if less than five years, coverage from the employee's earliest opportunity to enroll). Unlike with the Federal Employees Health Benefits system, the five year rule cannot be waived by the employee's agency. If a deferred annuity is taken, coverage is suspended (not terminated) from the date of retirement until the date the annuity begins.

At retirement, the employee must (for whatever coverage s/he had prior to retirement) choose how much coverage to take into retirement, and (in some cases) how much coverage will be reduced beginning at age 65 or, if still working at age 65, at retirement. An employee cannot increase coverage at retirement or at any time thereafter, nor can it be renewed once discontinued.

After age 65 (or upon retirement, if the employee retires after then) the employee may choose coverage options with no cost to the employee (i.e. premiums fully paid by the government) but which reduce levels of coverage over time (as explained below), or may choose to continue higher levels of coverage for additional premiums paid. An employee cannot increase coverage in retirement (except under Options B and C), only to reduce or discontinue it. If no choices are made, coverage is discontinued and cannot be reinstated.

• For Basic, the employee must choose one of three options: "75% Reduction" (under this option, coverage will reduce by 2% per month until reaching 25% of pre-retirement coverage, after which no further reductions are made and coverage remains at that level for the remainder of the retiree's life), "50% Reduction" (coverage will thus reduce by 1% per month until reaching 50% of pre-retirement coverage, after which no further reductions are made and coverage remains at that level for the remainder of the retiree's life) or "No Reduction". The employee pays no premiums for the 75% Reduction option, but must pay all premiums for either the 50% Reduction or No Reduction options. For employees choosing either No Reduction or 50% Reduction, only the 75% Reduction can be later chosen, outside of discontinuing coverage.
• For Option A, coverage will reduce by 2% per month beginning the second month after age 65 until reaching 25% of pre-retirement coverage ($2,500) after which no further reductions are made and coverage remains at that level for the remainder of the retiree's life; the employee pays no premiums. There are no alternative reduction choices under Option A; the only other option is discontinuance.
• For Options B and C, an employee may choose either "Full Reduction" (coverage reduces 2% per month until reaching zero; the employee pays no premiums) or "No Reduction" (the employee must pay all premiums). Under each Option, an employee may "mix and match" multiples (reducing some multiples and leaving others intact), and if retiring before age 65 may have a second chance to change how multiples are covered at that time. Once Full Reduction is chosen for any multiple after age 65 it is irrevocable outside of discontinuing coverage.

AD&D benefits cease upon the employee's retirement and do not continue into retirement.

Payment at Death

Upon the death of an employee/retiree, death benefits (except for Option C) are paid as follows:^[6]

• If an employee/retiree has assigned ownership of the insurance, then to the beneficiary(ies) designated by the assignee(s), but if none, then directly to the assignee(s). (Option C coverage cannot be assigned to a third party.)
• If an employee/retiree has not assigned ownership, and a valid court order is on file directing payment, then in accordance with the terms of the order.
• If no assignment and no court order, then to the beneficiary(ies) designated by the employee/retiree.
• If no assignment, no court order, and no beneficiary(ies) designated, then the "statutory order of precedence"^[7] is used, as follows:
  • To the widow or widower,
  • To any surviving children (in equal shares) or their descendants,
  • To any surviving parent or parents,
  • To the court-appointed executor or administrator of the estate,
  • To the next of kin as determined by the laws of the state where the employee/retiree lived at death.

Upon the death of any insured under Option C, benefits are paid to the employee/retiree, but if the employee/retiree dies before payment, payment is then made to the beneficiaries who would be paid under Basic coverage, excluding any assignment of insurance.

In addition to the above, if an insured is diagnosed as terminally ill with a life expectancy of nine months or less, the insured can also elect a "living benefit", which is an accelerated payment of benefits. The benefits are paid directly to the insured, not to the beneficiaries. The benefit can either be a full benefit or a partial benefit (in multiples of $1,000); the amount paid will be less than the face value, the reduction being the interest the insurance company loses by paying early (it is believed that the amount, though, would still be more than if the policy was assigned to a third party). Premiums are reduced if the partial benefit is taken, and cease if the full benefit is taken. This option can only be taken one time and is irrevocable, but if the insured subsequently recovers, s/he is not required to repay FEGLI.